Directed by Oren Peli.Starring Katie Featherston, Micah Sloat, Mark Fredrichs, Amber Armstrong, Ashley Palmer 15Acert, gen release, 86min

This cheapie sleeper relies on suggestion to scare the life out of you, writes DONALD CLARKE

IT WOULD BE unwise to begin this review without offering a warning caveat.

Once in a while some small horror film builds a reputation for scaring the pants of suburban Americans, causing them sleepless nights and propelling the odd less stable punter into the nearest mental asylum. By the time the picture arrives on this side of the Atlantic, a mood of bubbling hysteria – similar to the panic that surrounds the latest influenza pandemic – will have infected the body cinema. Do you dare see Eat My Brains?Can you endure Viscera Islandwithout vomiting?

Well, you know what happens. The cinema ends up disgorging a mass of only modestly unnerved citizens. "It wasn't thatscary," they half-brag.

All of which is intended to clarify that, though terrifically canny and cautiously modulated, Paranormal Activityremains a cheaply made chamber piece that may puzzle punters who expect all thrillers to look and sound like 2012.

Made for about $15,000, Orin Peli’s film – already, by one measure, the most profitable ever made – deals with an ordinary couple living blandly in southern California. The surprisingly cheery Katie (Katie Featherston) has long been troubled by disembodied voices and bumps in the night. For most of her life the supposed spiritual visitations were mere irritations, but during one particularly nasty haunting her entire house burned down.

Now shacked up with Micah (Micah Sloat), a slightly pushy day trader, Katie appears relatively unfazed by the continuing phenomena. Her chap, however, decides that he cannot rest until he gets to the bottom of it all. A video camera is purchased and is set up to record what happens while they sleep. Will some scaly demon burst out of the hot press? Are disembodied spirits about to emanate from the air conditioner?

Well, despite having no formal film training and little previous experience, Peli understands how to exploit meagre resources to best effect. Paranormal Activityis not about demons, but about the noises demons make and the traces they leave. Presented as a found document, composed entirely of Micah's videos, the film offers us doors swinging mysteriously shut, voices manifesting from clean air, and impossibly percussive thumps echoing down commonplace corridors.

At the risk of soiling Marshall McLuhan’s memory, the medium is, here, very much part of the message. Such creaks and whispers would sink into the ether if filmed in lush 35mm photography, on sets the size of aircraft carriers. However, the sensitive viewer, attuned to watching holiday adventures and wedding parties on lower-grade video, should find the accumulating weirdness that bit more realistic when served up in a similar manner. Moreover, by encouraging his actors to improvise their lines, Peli allows another layer of muddy naturalism to creep into the picture.

Now, these techniques are scarcely new. Over the last decade, both The Blair Witch Projectand Open Wateremployed faux-verite to emphasise the creeping unease. Yet the fact that so few projects have successfully followed in those footsteps clarifies just how difficult it is to energise a mainstream cinema audience with fuzzy camcorder shocks.

The key word here is, perhaps, "audience". Viewed on DVD or in an under-populated cinema, Paranormal Activitymight seem a little anaemic and unstructured. Presented before a large mass of willing punters, however, it proves to be a very impressive fright- delivery system whose necessary leanness proves to be a genuine advantage.

Among the film's minor revelations is its reminder that the oldest forms of supernatural entertainment still have the power to engage. Paranormal Activityis closer to a carnival attraction – a ghost train or a geek show – than it is to a formally composed horror film. Such things, when done well, still belong in picture palaces, and Peli does it very well indeed.